Is CrowdWorks (KOSDAQ:355390) Using Debt Sensibly?

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. Importantly, CrowdWorks, Inc. (KOSDAQ:355390) does carry debt. But the more important question is: how much risk is that debt creating?

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What Risk Does Debt Bring?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is CrowdWorks's Net Debt?

As you can see below, at the end of September 2025, CrowdWorks had ₩13.1b of debt, up from ₩10.9b a year ago. Click the image for more detail. However, it does have ₩24.2b in cash offsetting this, leading to net cash of ₩11.1b.

How Strong Is CrowdWorks' Balance Sheet?

The latest balance sheet data shows that CrowdWorks had liabilities of ₩20.2b due within a year, and liabilities of ₩603.7m falling due after that. Offsetting these obligations, it had cash of ₩24.2b as well as receivables valued at ₩3.33b due within 12 months. So it can boast ₩6.80b more liquid assets than total liabilities.

This surplus suggests that CrowdWorks has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Succinctly put, CrowdWorks boasts net cash, so it's fair to say it does not have a heavy debt load! There's no doubt that we learn most about debt from the balance sheet. But it is CrowdWorks's earnings that will influence how the balance sheet holds up in the future. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

Check out our latest analysis for CrowdWorks

Over 12 months, CrowdWorks made a loss at the EBIT level, and saw its revenue drop to ₩12b, which is a fall of 9.8%. We would much prefer see growth.

So How Risky Is CrowdWorks?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And we do note that CrowdWorks had an earnings before interest and tax (EBIT) loss, over the last year. Indeed, in that time it burnt through ₩12b of cash and made a loss of ₩12b. However, it has net cash of ₩11.1b, so it has a bit of time before it will need more capital. Overall, its balance sheet doesn't seem overly risky, at the moment, but we're always cautious until we see the positive free cash flow. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. We've identified 2 warning signs with CrowdWorks (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.